From a business point of view, spending creates revenue, but production creates income. The difference between domestic production and domestic spending has three pieces: imports (included in spending, but not part of domestic production), exports (not included in spending, but part of domestic production), and the net change in business inventories (goods produced during a year but not sold during that year). Part of household spending is the purchase of imports, goods and services produced in other countries. Residents of other countries purchase our exports, products produced in this country and sold in other countries. Discuss how imports and exports affect U.S. income, production, and spending. Include your own personal examples.
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